Johnson Controls 2013 Annual Report Download - page 33

Download and view the complete annual report

Please find page 33 of the 2013 Johnson Controls annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

33
FISCAL YEAR 2012 COMPARED TO FISCAL YEAR 2011
Net Sales
Year Ended
September 30,
(in millions) 2012 2011 Change
Net sales $ 41,955 $ 40,833 3%
The increase in consolidated net sales was due to higher sales in the Automotive Experience business ($2.0 billion), Power Solutions
business ($224 million) and Building Efficiency business ($95 million), partially offset by the unfavorable impact of foreign
currency translation ($1.2 billion). Excluding the unfavorable impact of foreign currency translation, consolidated net sales
increased 6% as compared to the prior year. The favorable impacts of increased automotive industry production in North America,
strong automotive and buildings demand in China, and incremental sales from acquisitions were partially offset by the negative
impacts of lower automotive industry production in Europe, weak Building Efficiency markets and mild weather conditions on
automotive battery aftermarket demand. Refer to the segment analysis below within Item 7 for a discussion of net sales by segment.
Cost of Sales / Gross Profit
Year Ended
September 30,
(in millions) 2012 2011 Change
Cost of sales $ 35,807 $ 34,774 3%
Gross profit 6,148 6,059 1%
% of sales 14.7% 14.8%
The increase in total cost of sales year over year corresponds to the sales growth noted above, with gross profit percentage decreasing
slightly. Gross profit in the Automotive Experience business was favorably impacted by lower purchasing costs offset by higher
operating costs associated with performance at metals facilities and net unfavorable commercial settlements and pricing. The
Power Solutions business experienced favorable pricing and product mix offset by higher operating, lead, battery core and
transportation costs. Gross profit in the Building Efficiency business benefited year over year from improved labor utilization and
pricing initiatives, offset by overall unfavorable gross margin rates. Foreign currency translation had a favorable impact on cost
of sales of approximately $1.1 billion. Net mark-to-market adjustments on pension and postretirement plans had a net favorable
year over year impact on cost of sales of $87 million ($33 million charge in fiscal 2012 compared to $120 million charge in fiscal
2011) primarily due to assumption changes for certain non-U.S. plans partially offset by a decline in year over year discount rates.
Refer to the segment analysis below within Item 7 for a discussion of segment income by segment.
Selling, General and Administrative Expenses
Year Ended
September 30,
(in millions) 2012 2011 Change
Selling, general and administrative expenses $ 4,478 $ 4,393 2%
% of sales 10.7% 10.8%
Selling, general and administrative expenses (SG&A) increased by $85 million year over year, but decreased slightly as a percentage
of sales. Automotive Experience business SG&A increased primarily due to the incremental SG&A of acquired businesses, partially
offset by non-recurring fiscal 2011 costs related to business acquisitions. Power Solutions business SG&A increased primarily
due to higher employee related costs and incremental SG&A of acquired businesses. Building Efficiency business SG&A decreased
primarily due to cost reduction initiatives and fiscal 2011 restructuring costs. The unfavorable impact of net mark-to-market
adjustments on pension and postretirement plans in SG&A increased year over year by $150 million ($414 million charge in fiscal
2012 compared to $264 million charge in fiscal 2011) primarily due to a significant decline in year over year discount rates. Foreign
currency translation had a favorable impact on SG&A of $101 million. Refer to the segment analysis below within Item 7 for a
discussion of segment income by segment.